Carbon farming co-benefits: a review of concepts, policy and potential in Australian landscapes

Introduction

Natural and rural landscapes, where carbon is sequestered in trees, shrubs, grasses, soils and other biomass, are fundamental for safeguarding our climate system and planetary well-being. This assertion makes intuitive sense, but science-based policy mechanisms for climate mitigation through landscape management and land-use change are still catching up. This is especially the case in Australia, where activities under the Carbon Farming Initiative Act (2011) (Cth) (CFI Act) have been pursued mainly for the production of cheap carbon credits, with relatively little formal consideration of other wider impacts on people, communities, economies and ecosystem values (Baumber et al. 2019a; Carbon Market Institute 2022; Chubb et al. 2022). Now, after an independent review of the Australian Carbon Credit Unit (ACCU) scheme in 2022 and new legislation to support a domestic ‘nature repair market’ in 2023, there is an opportunity for carbon farming to be mobilised differently. New policy developments must now support more holistic approaches, by asking: How can carbon farming drive desirable and sustainable land use change? Or, how can carbon farming be deployed to achieve healthy ecosystems, thriving rural communities, strong custodianship by First Australians and carbon removal for a stable climate? In this article we explore these questions, by reviewing relevant concepts, current policy, and practical experiences in the domain of carbon farming co-benefits in Australia.

Global policy already provides key pointers on the wider societal and environmental potential of carbon sequestered in landscapes. For example, ‘nature-based solutions’ are recognised as having the capacity to provide 37% of the global climate mitigation required to meet the United Nations’ (UN) global climate targets (Díaz et al. 2019). Nature-based solutions are typically framed as externally-funded actions that ‘address societal challenges such as climate change, human health, food and water security, and disaster risk reduction effectively and adaptively, simultaneously providing human well-being and biodiversity benefits’ (World Bank 2022). Although caution is essential when it comes to apparently win–win policy fixes, the now all-pervasive global discourse on nature-based solutions points to new norms for climate mitigation in natural landscapes (Muradian et al. 2013; Seddon et al. 2021). Landscape interventions for climate mitigation must now aim to achieve much more than tonnes of ‘carbon dioxide equivalent’ (CO₂e) sequestered or emissions avoided, by also articulating goals around human well-being, biodiversity, and sustainability. This ‘multi-benefit’ approach is now foundational in global climate policy (UNFCCC 2022).

In this policy environment, the case of Australian carbon farming looms large. Now termed the Australian Carbon Credit Unit (ACCU) Scheme, carbon farming activities in Australia have evolved significantly in the last 13 years to become a cornerstone of domestic climate policy (Carbon Market Institute 2022). The ACCU scheme overwhelmingly dominates Australia’s land sector carbon markets, representing AU$2.7 billion of dollars of public investment through the government’s Emissions Reductions Fund (ERF), which to date has been the biggest buyer of ACCUs (CER 2023). Carbon farming contracts now extend across the Australian continent, impacting the management of tens of millions of hectares of natural landscapes, mainly in rangelands (Baumber et al. 2020). In addition, the new Nature Repair Bill 2023 (Cth) raises the prospect of biodiversity certificates being traded alongside ACCUs (DCCEEW 2024d). The ACCU scheme is therefore one of the world’s biggest land sector carbon schemes, and its environmental potential is now set to be amplified over time. By comparison, the international voluntary carbon market is estimated to be worth around US$2 billion, of which credits from the REDD+ mechanism (Reducing Emissions from Deforestation and forest Degradation) comprise the greatest share (Cannon 2024). (REDD+ was developed under the auspices of the UN Framework Convention of Climate Change in 2005. It is not part of global compliance markets for carbon credits, although Article 6 of the Paris Agreement suggests that this could occur.) Australia’s land-based carbon markets are thus of global significance in terms of scale, value and potential.

In this context of market anticipation and policy change, it is vital to understand what land sector carbon interventions do to landscapes and people. Here, the notion of ‘co-benefits’ has emerged in policy discourses, as a way of promoting the potential positive impacts of carbon farming – such as securing biodiversity, supporting rural communities, and enabling First Nations’ stewardship (CSIRO 2019; Carbon Market Institute 2022; ICIN 2022). Yet other potential co-costs or risks must also be recognised and managed to ensure that carbon credits are truly ethical and sustainable (Ürge-Vorsatz et al. 2014). This means considering how carbon farming activities can variously impact upon social equity, human well-being, climate integrity and environmental risk, among other things. Amid an array of complex and potentially overlapping policy terms, we use the word ‘co-impacts’ to refer to the range of effects generated by carbon farming, whether positive, negative, intended, or otherwise. In the next section, we explore the conceptual terrain of carbon co-impacts, making reference to international literature.

After the conceptual framing, the remainder of this article is dedicated to reviewing current policy and initiatives related to carbon farming co-impacts in Australia. Our review particularly identifies how co-benefits have been valued and rewarded through a range of mechanisms. Across these examples, we also identify how potential risks or negative co-impacts have been addressed. Our findings are presented as follows: we present essential background material on carbon and environmental markets in Australia; we describe the review methodology used to identify co-impact studies and co-benefit schemes currently operating in Australia; and we present our findings across different jurisdictions and policy domains in Australia. What emerges is an overview of how carbon co-benefits have been mobilised in policy and markets by various actors including federal and state governments, private and nongovernment bodies, and Indigenous organisations. Our conclusion then suggests how land-based carbon removal in Australia could deliver more explicit benefits for people and nature.

Key concepts for understanding the co-impacts of land sector carbon abatement

‘Co-benefits’ is a key term in climate mitigation policy in Australia (Carbon Market Institute 2022), although it is seldom defined with respect to wider and more differential co-impacts that can emerge around carbon farming activities (Ürge-Vorsatz et al. 2014). In general, co-benefits receive policy attention because they can ease the way for often costly or unpopular climate mitigation actions – especially where particular interest groups or local constituencies are concerned. In other words, whereas climate benefits are by definition diffuse, being experienced globally by future generations as reduced risk and harm, co-benefits or co-costs tend to be accrued in shorter timeframes, at more local or regional scales (Ürge-Vorsatz et al. 2014). Drawing from Australian cases, Fig. 1 shows how carbon farming can generate a range of different co-impacts, across environmental, social and economic domains (Fig. 1 adapted from Aboriginal Carbon Foundation 2019; Baumber et al. 2019a, 2019b; Cockfield et al. 2019; Cowie et al. 2019; Fleming et al. 2019; Metternicht et al. 2019; Climate Change Authority 2020; Point Advisory 2020). Together, these co-impacts shape the political context and consequences of carbon farming, with implications for climate action.

Fig. 1.

Illustration of the different kinds of co-impacts of carbon farming.

As noted, there is considerable variation in terminology, concepts and measurement approaches when it comes to the co-impacts of climate mitigation actions like carbon farming. For example, the Intergovernmental Panel on Climate Change (IPCC) uses the terminology of ‘co-benefits and adverse side-effects’ in its Fifth Assessment Report, to refer to the positive and negative side-effects of climate mitigation (IPCC 2014). This framing continues in subsequent reports, which also refer to ‘synergies and trade-offs’ in climate mitigation actions (IPCC 2023). In this policy domain, the Sustainable Development Goals (SDGs) provide a widely accepted framework for considering human development and environmental sustainability in the context of climate mitigation. The SDGs have particularly encouraged a policy focus on potential co-benefits of land sector carbon removals like improved agricultural productivity, food security, air and water quality, and biodiversity conservation (IPCC 2023); although with relatively little nuanced description of potential costs or risks, as is typically the case in global policy (Muradian et al. 2013).

Indeed, the problem with policy framings like co-benefits is that they can simplify more complex effects. For example, the impacts of climate mitigation can be positive for some, while being negative for others. Also, when impacts are considered across scales, over time, and between different actors’ priorities, values and interests the picture becomes even more complex. For this reason, Ürge-Vorsatz et al. (2014) advocate for use of the term ‘co-impacts’, to capture the various direct, indirect, intended and unintended effects of climate action. The notion of co-impacts also provides a shorthand for the vast array of other terms that are currently in use, including ‘non-climate benefits, ancillary benefits, co-impacts, co-costs, disbenefits, transaction costs, trade-offs, spillover effects, externalities and others’ (ibid: 551). Given this, we also use the term co-impacts, to provide a robust way of referring to the various potential effects of climate change mitigation actions. In Fig. 2, we provide a heuristic for interpreting carbon farming co-impacts, which shows how they can occur at local, regional and global scales, across private and public domains.

Fig. 2.

Illustration of how co-impacts occur across scales and for different beneficiaries.

Beyond these conceptual discussions, global carbon markets and their regulatory frameworks have made substantial progress towards defining, labelling, and measuring different types of carbon co-benefits and related risk management actions. In terms of land sector carbon removals and emissions avoidance, the most prominent mechanism here is that of REDD+, which aims to avoid deforestation and forest degradation, among other things. Since its emergence in 2005, the REDD+ mechanism has evolved into a vast policy domain that encompasses far more than narrow considerations of emissions reductions. With backing from international donors and multilateral agencies, REDD+ has now been cast as a way of mobilising climate finance to secure broad societal goals like biodiversity conservation (Phelps et al. 2012), community development and tenure security (Chhatre et al. 2012), social justice and equity (Schroeder and McDermott 2014), even human rights (Savaresi 2013), especially in tropical developing countries.

With these great policy expectations in play, REDD+ and its marketable co-benefits have thrived in the voluntary global carbon market. Here, carbon standards are applied to verify and validate not only emissions reductions (CO₂e), but also co-benefits like biodiversity conservation and community development. Prominent examples of such multiple-benefit standards include the Gold Standard, headquartered in Switzerland, and the Verra-managed Climate, Community and Biodiversity (CCB) Alliance’s standard, headquartered in Washington, DC. (The latter covering most multi-benefit land sector carbon projects, see CCBA 2023). To achieve co-benefits that can be marketed and transacted alongside carbon credits, these international standards must be followed rigorously. This rigour involves the application of specified accounting methods, independent auditing, and public disclosure of reports through market registries. Such monitoring, reporting and verification (MRV) activities have become a subfield of the global carbon industry: vital for market credibility and the generation of financial value, yet not without weaknesses in relation to ongoing complexity and contestation in the local contexts where standards are implemented (Gupta et al. 2012; Milne and Mahanty 2019).

This points to the other key domain of co-impacts policy in global carbon markets, which is the treatment of risks and negative impacts. In the context of REDD+, for example, undesirable co-impacts can be acute for local and Indigenous communities, especially where property rights and livelihoods are insecure (Milne et al. 2019). International policymakers have therefore invested heavily in the development of so-called REDD+ safeguards, which are defined as ‘minimum requirements for avoiding apparent risks’ of carbon projects (Phelps et al. 2012, 497). Standardised ‘safeguards information systems’ now operate alongside most REDD+ projects, to ensure that basic requirements are met for harm minimisation (UNFCCC 2024). A prominent safeguard in UN-backed projects is the requirement for REDD+ implementers to secure Free Prior and Informed Consent (FPIC) from local communities and Indigenous peoples (UN-REDD Programme 2024). FPIC is also a requirement in some multi-benefit carbon standards, like the CCB standard, as it signals robust community participation and respect for the rights of Indigenous peoples (CCBA 2023). In this way, REDD+ safeguards are intertwined with the achievement of social co-benefits in the long run (Chhatre et al. 2012), including risk reduction. Importantly, this point is not lost on carbon investors, who are prepared to pay a premium for apparently safer and more transparent projects (Ernst & Young 2022).

Alongside these social policy developments, new measures for biodiversity co-benefits have also emerged. These have arisen in part because of parallel mechanisms to carbon farming like biodiversity offsets and payments for environmental services – a recent iteration now emerging through the Taskforce on Nature-related Financial Disclosures (TNFD 2024), which builds upon earlier global initiatives like The Economics of Ecosystems and Biodiversity (TEEB). As a result of these initiatives, measures for biodiversity credits or certificates have been developed globally, and in Australia, often using biophysical metrics that refer to species and habitat conservation. This has led to market innovation in which carbon and biodiversity units are traded together, using strategies like bundling, stapling, stacking and labelling, as shown in Fig. 3 (adapted from Compensate Foundation 2023). These strategies show how some biodiversity benefits are sold along with carbon credits, even when the two products originate from different and sometimes environmentally dissimilar places – as has occurred in some Australian examples, explored below. Only in integrated projects, where a carbon standard also measures biodiversity benefits in the same place, can there truly be coproduced carbon and biodiversity benefits.

Fig. 3.

Different approaches to selling carbon and biodiversity products.

In sum, this section of the paper has provided a conceptual overview of carbon co-impacts, and their treatment in climate policy. The international domain of voluntary REDD+ carbon projects is instructive here, given the emergence of multi-benefit standards that aim to bring various co-benefits to market, along with formal safeguards that attempt to systematise risk management. These policy mechanisms, taken together, show how a ‘multiple objectives, multiple impacts’ approach (Ürge-Vorsatz et al. 2014) can inform thinking about the various effects of carbon farming projects across scales, for different actors. This type of approach can also help counter the problem of carbon reductionism, by positioning ecosystem health and human wellbeing outcomes as core benefits in diverse markets, not just as co-benefits attached to carbon transactions. With this in mind, we now provide a brief account of Australia’s carbon farming scheme and environmental markets, before presenting our review of current attempts to measure and transact carbon co-benefits in Australia.

Overview of carbon farming and environmental markets in Australia

Australia’s engagement with environmental markets has been pioneering, highly diverse, and of global significance in terms of scale and expenditure. Federal and state governments long ago embraced market-based approaches to addressing biodiversity threats and climate challenges, as seen in various state-led biodiversity offset policies and the ACCU Scheme. Notably, government bodies have played leading roles in designing, convening and regulating these markets, while also participating in them as a buyer and/or seller of credits. In addition to these unique domestic policy arrangements, international carbon and biodiversity standards and other ‘nature positive’ market initiatives are also gaining traction in Australia, such as the Taskforce on Nature-related Financial Disclosures (TNFD 2024) which promises to leverage corporate investment in nature repair.

The most significant environmental market in Australia is the federal government’s Australian Carbon Credit Unit (ACCU) Scheme, which began life as the Carbon Farming Initiative in 2011. This scheme was established to deliver least-cost greenhouse gas emissions abatement via a range of activities, including land sector emissions avoidance and carbon removal. The government, through its Emissions Reduction Fund, has been the chief buyer in this market since 2014, capturing approximately 90% of ACCU sales from a budget allocation of AU$4.5 billion (Ernst & Young 2023), claiming 217.3 million ‘tonnes of abatement’ across its investments to March 2023 (CER 2023). With recent changes in Australia’s climate policy, including tighter emissions targets for big emitters under the revised Safeguard Mechanism, private demand for ACCUs is expected to grow significantly (Deane et al. 2023). This growth will include industrial compliance buyers and new voluntary buyers chasing corporate climate commitments or ethical investments.

The vast majority of ACCUs (76%) are derived from three prominent emissions abatement methods, two of which belong to the land sector: Human Induced Regeneration (HIR) and Avoided Deforestation (AD). (The other major method is that of Landfill Gas capture, for subsequent energy generation). Notably, these are low input and/or low transaction cost methods, being prevalent on marginal agricultural land across the rangelands (see Fig. 4). This has enabled the production of cheap carbon credits, in keeping with Australia’s least-cost abatement policy (Evans 2018; Baumber et al. 2020). Other land sector carbon farming methods have not achieved such high production volumes at low cost, although they are of vital importance, especially from a co-benefits perspective. For example, ACCUs from Savanna Burning methods typically cost more to produce, yet these projects also frequently deliver a range of crucial co-benefits for Aboriginal custodians in northern Australia (Altman et al. 2020; Eggleton 2022). Projects using the Environmental Plantings methods also involve high project costs, and often high opportunity costs too, but the potential co-benefits for threatened local biodiversity in degraded areas can be of particular value, especially when plantings are mixed species in ecologically strategic locations, so that landscape connectivity is restored (Baumber et al. 2019a). Although the Australian Government and compliance buyers are still mainly focused on acquiring cheap ACCUs for mitigation purposes, the voluntary carbon market is now showing an increased interest in co-benefits, with price premiums to match (Carbon Market Institute 2022; Department of Environment and Science 2023; Clima 2024). This signals a future of more investment in higher value carbon farming in Australia.

Fig. 4.

Map of active carbon farming projects in Australia, under the ACCU Scheme (CER 2024).

Alongside various international controversies concerning carbon markets, the integrity of Australia’s ACCU Scheme has also been questioned. Media attention and questioning of the quality of ACCUs reached a peak in 2022, which triggered the Independent Review of Australian Carbon Credit Units, also referred to as the Chubb Review. The Chubb Review concluded that the ACCU Scheme was ‘essentially sound’ and made 16 recommendations for scheme reform, all of which were accepted by the government. Importantly, the review’s 13th recommendation was that the Clean Energy Regulator (CER), which is largely responsible for the ACCU Scheme, should ‘develop procedures to support transparency of different project characteristics and types of co-benefits’ (Chubb et al. 2022, p. 11) including standards to allow the Regulator to certify co-benefits for the market context. Australia’s independent Climate Change Authority also reviewed the ACCU scheme: here too, were calls for more attention to be paid to co-impacts, along with potential disruptions from climate change risk (Climate Change Authority 2023).

The creation of policy to address these recommendations on co-benefits and risks is now underway. Although the CER does not currently play a role in measuring or incentivising co-benefits, it does have a mandate to address potential adverse co-impacts of carbon farming under current legislation. The CER’s treatment of risk is discretionary, however, and is yet to be systematised or made visible to the market through the application of public standards or risk ratings. Instead, the regulator can assess risk at a project level, and holds powers to seek additional information from projects to ensure that they are mitigating potential harms. Projects can also be rejected by the CER or the relevant Minister if they are found to have ‘material adverse impact on conservation of biodiversity, local land for farming, water availability, local communities or employment’ (Parliament of Australia 2011), although this has never happened. In addition, in April 2022, the CFI Act was amended to allow the Minister for Agriculture to veto native forest regeneration projects that might have adverse impacts on agricultural production and regional communities, a safeguard yet to be applied (Climate Change Authority 2023).

Amidst this lack of clear policies around risk regulation and management, the Carbon Market Institute (CMI), which is the peak body representing Australia’s carbon industry, has developed a voluntary Code of Conduct for those participating in carbon farming projects. Although voluntary, it has been widely accepted by most carbon service providers in Australia (Deane et al. 2023), and resembles some of the standardised efforts in international carbon markets to manage project implementation risks through safeguards, described above. That said, the impetus for CMI’s initiative is more related to professional conduct in the industry, rather than management of social and environmental risks at project sites, which have not yet been comprehensively documented (see DISER 2022; Climate Change Authority 2023). Indeed, regulated risk management to date has focused only on emissions outcomes, via the CER’s deployment of the Full Carbon Accounting Model (FullCAM) to calculate emissions reductions under the ACCU Scheme’s vegetation methods, with associated auditing protocols. In future, a much broader range of biophysical and socio-economic risks will need to be addressed systematically, especially as climate change impacts intensify in the land sector. Regulatory approaches, however, should not hinder flexible and adaptive management of carbon farming projects over time, as risks evolve.

Ultimately, as Australia’s carbon market matures, more systematic and transparent approaches to co-impacts will need to emerge, just as they have done in the context of international voluntary carbon markets. In Australian, this will likely occur through the forthcoming Australian Carbon Exchange (CER 2024), which aims to facilitate live trading of ACCUs for voluntary buyers. This platform will inevitably generate increased market interest in carbon co-benefits, along with a need for standardised ways to communicate and measure the presence of different kinds of co-impacts for potential buyers.

In this task, Australia has made significant progress in developing biodiversity units and metrics for various schemes, particularly through state governments. Perhaps the most notable example is the Biodiversity Offsets Scheme (BOS) in New South Wales, which involves major developers offsetting biodiversity loss on a like-for-like basis (BCT (Biodiversity Conservation Trust) 2022), with similar schemes now operating in Victoria and Western Australia. All have involved enormous government investment in the development of metrics for exchangeable biodiversity units, although they have faced a range of technical challenges and governance risks including questions about the viability and credibility of ‘no net loss’ concepts in the domain of biodiversity (Maron et al. 2015; Gibbons et al. 2018). As Australia moves towards recognition and measurement of carbon farming co-benefits, this knowledge is of vital relevance.

Relatedly, on environmental co-benefits, Baumber and colleagues undertook a comprehensive review of payments for ecosystem services schemes (PES) experiences in Australia (Baumber et al. 2019b), with the aim of exploring how existing measures and approaches could be adapted to the context of carbon farming. They identified a range of PES or PES-like schemes in Australia including biodiversity offsets, government conservation tenders, bundled ecosystem services programs, and water trading platforms. Although there is no overarching framework for measuring and transacting ecosystem services in Australia, they found sophisticated indicators, benchmarks and models for measuring the delivery of ecosystem services like the avoidance of soil erosion, salinity and biodiversity loss, as well as increases in habitat, ground cover, species richness and water quality. Again, these experiences offer a significant resource for developing meaningful environmental co-benefit measures in the Australian carbon farming context (Baumber et al. 2019a, 2019b), especially in the rangelands (Baumber et al. 2020).

Finally, although measures for environmental co-benefits are rather well articulated in Australia, equivalent metrics for the social, cultural and economic co-impacts of carbon farming are less well established. In part, this is because the social domain is highly subjective, with complex causalities at play. Practitioners therefore caution against overly standardised, demanding or top-down approaches to measuring socio-economic co-benefits, especially concerning First Nations’ communities (Barber and Jackson 2017; Aboriginal Carbon Foundation 2019). In government schemes that do attempt to measure socio-economic co-benefits, like Queensland’s Landscape Restoration Fund (see below), the Indigenous-led Core Benefits Framework has been adopted (Aboriginal Carbon Foundation 2019) alongside other more generic socio-economic metrics that gauge, for example, new regional employment or training outcomes and/or opportunities for local businesses and community members in carbon farming projects (LRF 2023). Scholars too are steadily building more nuanced studies of carbon farming’s socio-economic benefits and risks across scales in the rangelands, to inform future governance (e.g. Cowie et al. 2019; Fleming et al. 2019; DISER 2022). Building upon this, we now present our review methodology and findings.

Review methodology

Given high rates of change in the Australian policy environment, our review focuses upon initiatives or schemes that are currently active or are under development, with most observations emerging from 2019. This captures a period during which Australia’s ACCU scheme and other activities have matured and grown, along with policy reorientation towards carbon co-benefits, as described above. To explore current efforts that measure, value and transact carbon co-benefits in Australia, we reviewed only projects or schemes that met the following criteria: (i) they produce a tradeable CO₂e unit with a co-benefit of some kind; and (ii) part or all of the product involves Australian land-use change, which to date has mainly occurred in the rangelands. This undertaking has involved searches for current and proposed policy and initiatives, as well as a review of scholarly and grey literature. The results section describes the review findings.

Our review method was qualitative and ‘integrative’ (Snyder 2019), in that we sought to explore the emerging field of carbon farming co-impacts in Australia from a range of perspectives, with the aim of drawing out novel insights from this relatively under-researched area. Using key search terms in Google Scholar and Google, we identified policy and project websites, reports and other forms of grey literature, as well as academic literature on carbon co-impacts, co-benefits and co-risks, and market treatment of these things. This led to the production of a database of articles and resources, which listed key features including: the primary topic of each article or source; the treatment of co-benefits or co-impacts; the type of article or source; and key insights for our inquiry into the co-benefits of Australian carbon farming. Alongside peer-reviewed articles, grey literature sources included carbon market databases, government policy documents, press releases, parliamentary submissions, consultancy reports, carbon market standards, project and policy webpages, and newspaper articles. Thirty types of co-impacts were identified, across over 100 sources.

After this initial review, we took a policy-oriented approach to analysis by looking at existing schemes to finance, reward or transact carbon co-benefits in Australia. To do this systematically, we developed a framework for documenting the key design and implementation features of each mechanism or scheme. This was a necessary analytical step because there are no widely established or standardised frameworks for assessing multi-benefit schemes in Australia (Baumber et al. 2019a; Chubb et al. 2022). Our framework was developed iteratively, and in response to key concerns in the policy literature, outlined above. Ultimately our framework enabled us to assess how co-benefits were being articulated, governed, monitored, verified and implemented in Australia (see Table 1).

Co-benefits in Australian policy and practice

This section presents our review findings, by summarising current approaches to measure, transact and value co-benefits in the Australian context. As described above, our review sought to identify and examine any initiative or scheme currently operational or in development, which produces a tradeable CO₂e unit with co-benefits, where part or all of the product involves changes to Australian land use. These schemes are not just limited to transactions of ACCUs plus co-benefits, but also include examples from international voluntary carbon markets being implemented in Australia. To present our findings, we group the different schemes into their jurisdictional or policy domains, as follows: federal government efforts, state government schemes, private schemes and those led by nongovernment organisations (NGOs), and First Nations led initiatives.

Conclusion

This article has reviewed current knowledge and policy in relation to carbon farming co-impacts in Australia. To begin the article, we drew from international literature to develop a conceptual framing around ‘multi-benefit’ approaches to climate mitigation, which are increasingly the norm in global policy (UNFCCC 2022; World Bank 2022). Here, the international voluntary carbon market has shown leadership, especially in relation to REDD+ projects that use co-benefit verification and risk management systems (Chhatre et al. 2012; CCBA 2023). These standards do not guarantee perfection or transparency (Milne and Mahanty 2019), but they do at least provide frameworks for accountability, forming a basis for transactions between buyers and sellers, and an articulation of aspirations around quality, sustainability, biodiversity, Indigenous custodianship, and human well-being – not just tonnes of CO₂e.

Given the sheer scale and level of investment involved in Australia’s carbon farming scheme – making it one of the world’s biggest land sector climate mitigation schemes – it is surprising that domestic policy and regulation have not kept pace with the complexity of ‘co-impacts’ involved (Ürge-Vorsatz et al. 2014). Our review points to an emerging evidence base on co-impacts in Australia, which shows how the costs and benefits of carbon farming accrue differently among actors, over space and time. To seize opportunities and to mitigate risks that emerge from carbon farming, these co-impacts require consistent and proactive policy settings, which have not yet been achieved.

Indeed, our review of active policy mechanisms for carbon farming co-benefits points to an ad hoc policy environment, in which many flowers are blooming. For example, we identified over 20 different schemes active in Australia for securing and/or transacting carbon farming co-benefits. These schemes involved two federal pilots and six state administered government grant programs, aimed mainly at augmenting the ACCU Scheme to achieve new innovations or co-benefits. Here, states have exhibited a preference for directing their matching funds to habitat restoration and other high value projects in which ACCU revenues alone are insufficient to drive desirable change. Queensland’s Landscape Restoration Fund (LRF 2023) is exemplary here, especially given its adoption of co-benefits standards that draw from established third-party verification frameworks, including the Indigenous-led Core Benefits Verification Framework (Aboriginal Carbon Foundation 2019). Other examples can be found in the private and nongovernment sectors too, where we found 10 different schemes in operation. Together, these innovations signal the potential of multi-benefit environmental markets in Australia, especially if approaches can be harmonised across jurisdictions, for more systematic investments that are in line with national priorities.

Such a task is not straightforward, however, as debate over appropriate co-benefits metrics and values continues. This is especially true for environmental co-benefits like biodiversity and habitat improvements, but it is also true for social, cultural and community benefits (Barber and Jackson 2017; Metternicht et al. 2019; Baumber et al. 2019a). Herein there are core measurement dilemmas to navigate, such trade-offs between rigour and cost-effectiveness; third-party oversight versus community ownership; and the use of standardised metrics versus those which are sensitive to the local context. In the current policy environment, project proponents may be collecting their own data on co-benefits, but there remains a lack of disclosure and independent verification of co-benefit claims. Thus, if measurement and reporting of carbon co-benefits could be somewhat standardised nationally – such as via a nested or adaptive governance approach that allows for local control and responsiveness (Nelson et al. 2008) – then market confidence and investment in ‘good carbon’ should rise.

Finally, we warn against being evangelical about standardisation and commodification in environmental markets. This is because local realities will ultimately shape outcomes and co-impacts. Drawing from local expertise and knowledge is therefore vital to interpret and avoid potential risks, as well as to maximise opportunities and co-benefits. For example, deep local knowledge is now being deployed to ensure that savanna burning methods avoid perversity and enhance ecosystem values through careful biodiversity accounting (Evans and Russell-Smith 2019; Corey et al. 2020; Sangha et al. 2021). Innovative relationships with local, regional and First Australians communities will also be fundamental over time, to ensure that social risks are minimised, and co-benefits are maximised equitably (Altman et al. 2020; Baumber et al. 2020; DISER 2022). Thus, for carbon farming to play a role in achieving landscapes that are biodiverse and healthy, while supporting thriving rural and Indigenous communities, national policy frameworks and regulation must find ways to land gently on the ground, to enable localised practices and implementation. If national policy can navigate this delicate terrain, then Australian carbon farming has the potential to deliver vital benefits for people and nature, to become a world leader in land sector carbon abatement.